Pilot Study on Scientific Knowledge Enhancement in Angola

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International Research Institute of Stavanger AS www.iris.no

Preface

Objective

The objective of the pilot study was to map actual position, assess feasibility of tools and actions, and to propose a road map for enhancement and diffusion of scientific knowledge amongst Angolan institutions and industry sectors.

This report reflects on status today in Angola in areas relevant to higher education, related to economic growth and social development as a consequence of more industrial activity, based on Angolan skilled enterprises‟ participation in the value creating sectors in all regions of the country.

Scope

The objective of the study is presented by through the topics;

a) Angola‟s position – Comparative review b) Current situation for Angolan institutions

c) Barriers and prerequisites for national institutions

Thanks to contributors.

We acknowledge the useful information provided by the individuals who participated in meetings, those who gave the project team guided tours at various industry and HEI sites, as well as all documentation and other material provided.

Special thanks to Ms. Sandra Dias dos Santos (Directora, RKK Luanda Office) who organised our meetings and access to key documents and informants.

The pilot study took place during 2010-2011.

Stavanger, 24.1.2012

Christian Quale, Project Manager

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Summary

The hinterland

In 1975 the Angolan petroleum industry accounted for some 2000 workers, and in year 2000 this number had grown to some 15000. Even though the petroleum employees accounted just for a negligible percentage of the total labour force, this period had seen a new industrial sector slowly emerge with a workforce that was formed partly by movement of experienced and trained personnel from other sectors and occupations, and partly from the training and education of new entrants. Such mobility from other sectors has now tapped off, and a high share of the current 65000 workers in the Angolan oil industry (2009) possesses specific skills. It is foreseen that the expected further expansion of this industry will be even more dependent on domestic training and education.

While there is heavy dependence on oil revenue, Angola‟s non-oil sector has been growing faster than the oil sector for the last two years. Until recently growth in the non-oil sector was driven mainly by public investment in construction and infrastructure, but private investment has increased markedly, especially in the construction of office buildings in Luanda. Luanda remains the economic and political hub of the country, accounting for 70-75% of economic activity and consumption.

Comparative studies have shown that the spillover effects vary largely between petroleum producing nations. Newly industrialised countries such as Malaysia and Brazil have chosen strategies for the petroleum sector and a role for their national oil companies with much commonality to the Angolan strategy, and have been quite successful. In Africa, Nigeria and Angola are parts of the same region and face similar conditions in many respects. Lessons can be drawn from these and other countries‟ (including Norway) experience and be adopted for the Angolan context.

The petroleum industry in itself is not an engine for nationwide job creation and poverty reduction. To benefit from the unparalleled opportunity to prosper from its oil wealth, Angola faces major challenges that need to be managed to avoid damaging and counterproductive effects of the oil driven economy. Thus, with the Angolan petroleum activity as a foundation and provider of opportunities, the scientific knowledge sector addressed in this framework should encompass the higher education system and associated research facilities and their roles in an industrial innovation system with a view to regional development and enhanced social welfare.

The study

A study into the potential for scientific knowledge enhancement should ideally cover the whole chain of causes and actions that might impact growth and diffusion. However, within the project scope it was not considered realistic to initiate in-depth activity to address the complex array of issues which may impact educational and training development; e.g. communication and infrastructure, legal and fiscal framework, incentive schemes, cultural and historic barriers, maturity of institutions, dominant economic factors, etc.

This pre-feasibility study was carried out with a view to document the current position of Angola, assess the feasibility of relevant tools and actions, and to identify some key areas that need to be addressed to enable enhancement and diffusion of scientific knowledge within Angolan institutions, as well as knowledge based activity growth in adjacent industry sectors and the society at large.

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To supplement desktop research on matters relevant to the study topics, meetings and interviews were conducted with 19 individuals representing Angolan universities and research institutions, training providers, the petroleum industry and other industries, ministries and state institutions. The meetings took place in Luanda in June 2011.

The picture

Since 2007 Angola has seen a significant and rapid increase in number of Higher Education Institutions (HEI). The public university Universidade Agosthino Neto (UAN) used to have campuses in ten of Angola´s 18 provinces. After a reorganisation of the higher education system in 2010 the UAN now holds campuses in Luanda and the Bengo province, while the regional campuses became seven autonomous public universities. Recently UAN opened the modern Camama campus in the Kilamba University City at the outskirt of Luanda where the science and engineering faculties are the first to move in. This campus has planned capacity for 40000 students and the first 5000 will be enrolled early 2012. In addition to the public universities, there are now 13 approved private universities, mainly located in the vicinity of Luanda.

However these developments witness of major expansion in the HEI sector, there are admittedly challenges in relation to sufficient infrastructure (equipment, facilities) and qualified teachers. These are key issues that will need high attention in the further process.

The expansion in the university sector is one indicator of an active Angolan national and local content policy which also includes the knowledge sector, leading to a higher proportion of students who take their education in Angola and more Angolan nationals to fill academic HEI positions. The increased number of academic and support staff, research projects and construction of campus buildings and facilities, also contribute to local employment opportunities. Further, this growth in the HEI sector should be fundamental to positive spillover effects into most societal sectors in the short and long term perspective.

The implications

Some key observations and policy implications with relevance to higher education and knowledge in Angola:

 Unnoticeable 10 year progress for Angola on the education component of the global knowledge economy index.

- Angola‟s effort for modernisation and growth, driven by the petroleum economy, has hardly had effect on the national level of education. In order to depart from the bottom layer amongst nations on this aspect, Angola‟s inveterate approach to public policy planning and implementation should be seriously examined.

 An unfavourable environment for starting up new enterprises hampers the climate for lasting knowledge based technological, economic and social advancements.

- Skills are a prerequisite for higher value added activities and dynamic growth, and a diversified industry and trade structure will provide opportunities for educated youth.

To increase the probability for a successful nation development, the root causes for Angola‟s low “ease of doing business” rating should be genuinely addressed.

 Lack of inter-ministry policy coordination.

- At state level, there could be more joint-working arrangements across ministry borders to ensure coherent policy design for development of skills and an environment that sustain productivity, employment and poverty reduction.

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 Unreliable / unavailable HEI, industry and society statistics.

- Verified, ample statistics are considered vital in order to prioritise effort and to measure progress of strategic national programmes, including investments in the higher education sector. Planning and monitoring of national development efforts in Angola seem to suffer from lack of such statistics. Significant upgrading of the commitment, framework and processes is deemed necessary in this area.

 The push for fast track expansion in primary (and secondary) education through massive site developments leaves a large gap to the availability of qualified teachers.

- While the state allocates funds to construction of buildings for necessary primary and secondary education, the attention to corresponding teaching capacity is underrated.

There should be balance between construction logistics and education of proficient teachers.

 Low teacher salaries, hence low recognition and attractiveness, also contributes to slow increase in available and proficient teaching capacity, especially in the primary and secondary education system.

- To stimulate the interest for the teaching profession, basic salary level in addition to supplementary sources such as grants and continuing education for instructors and teachers should be improved.

 Mismatch between the quality provided through secondary education and the expected standards at university enrolment, leads to a high drop-out rate at natural sciences and engineering studies.

- Relations between the secondary and tertiary education level should be formalised in order to align secondary curricula with university needs. Further, the opportunities for admission to university for the „wrong‟ reasons should be limited.

 Lack of staff in the higher education sector solicits multiple job situations where lecturers share their capacity between several universities, leading to even less time for individual student tuition.

- The need for contract work and time allocated to different universities should be addressed by offering more permanent positions in the universities.

Although all good intents for Angola to undertake a diversified and balanced development of the nation, including the higher education sector, there are inherent mechanisms that are not always conducive to these processes. Manpower development with successful capacity and knowledge growth depends on strengthened indigenous institutions as well as generation of new activity. This in turn requires an enabling environment with genuine opportunities also for new companies and stakeholders to participate in the new Angolan economic domain. Thus the development is saddled with subtle issues. However there is growing awareness of these, and for Angola to break out of the group of least developed countries¹, it is critical that such aspects are being addressed.

1 The least developed countries (LDCs) are a group of countries that have been identified by the United Nations as

‟least developed‟ in terms of their low gross national income, their weak human assets and their high degree of economic vulnerability.

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1 Study background and approach

1.1 Background

The civil war left Angola‟s education system in a state of disarray: very few investments were done in education during the war, thousands of schools were damaged or destroyed, and children were sent to military training. With the end of the civil war in 2002 the Angolan government started the process of rebuilding the education infrastructures.

Over the last five years Angola has seen a positive change of direction in many areas, including education. An education reform started in 2004 with the goal of making the schooling system more efficient in correspondence with the nation's development aspirations. This should include strengthening at all education levels in all provinces.

Angola is a key member of the Association of Portuguese Language Universities (AULP), where close ties are developed between universities in Angola and other countries. Liaison and agree- ments have been entered into with e.g. Portugal, Cuba, Russia and Brazil for provision of teachers to Angola, for studies abroad as well as technological cooperation. A Norwegian vocational training institute has been strongly involved in vocational and technical training programmes under a contract with Angolan authorities.

Arguably, Sonangol‟s major role in the petroleum sector already represents a large influence on Angola‟s competence base. However, in order to strengthen the petroleum industry‟s contribution to the benefit of the nation and its population, further knowledge sector development with basis in the petroleum sector‟s requirements as well as its financial and technological muscle, is essential.

1.2 Conceptual study model

The objective of the study has been to review and map the structure of the Angolan higher education and research community with the view to highlight areas deemed critical to successful enhancement of the scientific environment in Angola, hereunder to identify and assess:

- Current practices and bottlenecks for establishing new or growing knowledge areas

- Technical, organisational and educational gaps that need to be closed to realise the national development potential

Input

Petroleum industry driven knowledge and

technology

Measures for knowledge development within

and diffusion beyond the Angolan

petroleum sector

Mediators

Beneficiaries

Improved national scientific knowledge

base

Barriers

• Infrastructure

• Cultural traditions

• Receiver capacity

• Institutional capacity

• . . .

Prerequisites for knowledge diffusion

• Teaching

• Research

• Student population

• Funding

• Cooperation

• . . .

Labour market Society at large

Figure 1-1 Conceptual study model

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A conceptual model describing input and output, as well as mediators, prerequisites and barriers to scientific knowledge enhancement and diffusion, is depicted in Figure 1-1.

A major assumption embedded in this model, is that the petroleum industry has the capability of being a primary driver for knowledge enhancement in research and higher education in Angola. A successful outcome from this approach however, depends on a number of factors as this report has endeavoured to address.

1.3 Methods and data

This pre-feasibility study was carried out with a view to document the current position of Angola, assess the feasibility of relevant tools and actions, and to identify some key areas that need to be addressed to enable enhancement and diffusion of scientific knowledge within Angolan institutions, as well as knowledge based activity growth in adjacent industry sectors and the society at large.

To supplement desktop research on matters relevant to the study topics, meetings and interviews were conducted with 19 individuals representing Angolan universities and research institutions, training providers, the petroleum industry and other industries, ministries and state institutions.

The meetings took place in Luanda in June 2011. The interviews were semi-structured (cf.

Appendix iii). Notes were taken, however according to agreement the respondents‟ identity has not been listed in this report.

The analysis also draws on documentary sources collected during the process, both during the meetings and from open sources, to complement the information provided by the interview data.

It has not been easy to get an updated overview of relevant information on the Angolan higher educational system. One reason for this is the rapid expansion in the number of HEIs since 2007 (cf. Section 6.2) which has increased the diversity of information sources, not always harmonised according to a common national reporting framework.

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2 Angola compared to other petroleum exporting nations

2.1 The Angolan petroleum trail

Through periods of colonialism and varying regimes, the Angolan petroleum sector went through stages influenced by international oil companies. Prospecting for hydrocarbons in Angola started in 1910, however what can be characterised as a petroleum industry expanded in the 1960‟s when oil was discovered offshore Cabinda. By 1973 oil had become the country‟s largest source of export earnings, overtaking coffee.

The national oil company Sonangol was set up in 1976 and according to the guidelines in Decree 13/78 in 1978 (the Petroleum Law), all hydrocarbon deposits and mining rights were granted to Sonangol. Sonangol was permitted to enter into joint ventures with the oil companies already producing oil in Angola. Cabinda Gulf Oil Company (a subsidiary of Chevron from 1984), Petrofina and Texaco were the most prominent joint venture partners.

During the 1980s and 1990s, successful shallow water exploration led to new developments and a steady rise in production. By 2000 Angola‟s production had approached 800000 barrels per day and Angola had positioned itself as by far the largest oil producer in Sub-Saharan Africa, apart from Nigeria. In the early 1990s, the Angolan oil industry entered a new stage when a series of successful large deep water discoveries further off the Angolan coast were made by major international oil companies. Application of new deep water technology, pioneered in oil provinces like the North Sea, has allowed development of these resources and brought a new surge in Angola‟s oil production. Foreign companies participate through joint ventures and production sharing contracts and the nation is still highly dependent on foreign personnel and technology.

Angola became a member of OPEC in late 2006 and in late 2007 was assigned a production quota of 1.9 million barrels per day. The oil and gas sector is the real engine in the Angolan economy and accounts for 55% of GDP and 80% of government revenue. As the sole concessionaire in Angola, Sonangol dominates the oil sector and the nation’s economy at large.

Since the end of the civil war in 2002, oil has also acquired a quite exceptional significance in the political economy of Angola, affecting the course and outcome of the civil war, the quality of governance, the country‟s international relations and even its culture.

In spite of its resource wealth, which is not limited to oil, Angola still ranks 146 out of 168 countries in human development and receives the largest portion of foreign direct investment provided to least-developed countries (LDCs)².A distinctive characteristic of the LDC countries is a generally low level of education. The good news is that average growth in productivity was high among the LDCs, 31% from 1995 to 2005. However, with a narrow education base and only 12%

of children in Angola entering secondary education³, only a small proportion of the potential workforce will have prospects to take advantage of opportunities for higher productive work in newer technologies or service sectors.

Angola‟s initiatives to support economic diversification and improve the general business climate are often not broad based or well coordinated. The revenues earned from oil and gas sales have made Sonangol the second largest company in Africa and it largely acts as a Sovereign Wealth Fund, including large global investments. Yet it does not have a well-developed policy to guide the use of its funds for sustainable diversification of the economy, nor has it been part of broader

2 UNCTAD: Foreign Direct Investment in LDCs - Lessons learned from the decade 2001-2010 and the way forward 3 Net enrolment rate; http://data.worldbank.org/indicator

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efforts to improve Angola‟s business climate, with the exception of the creation of the BDA and FND⁴. Moreover, these institutions‟ activities could be further improved.

2.2 Economic indicators

Angola's high growth rate is driven by the oil and gas sector, which also has taken advantage of high international oil and gas prices. As can be seen from the left-hand tableau Figure 2-1 Angola has had a steady increase in its petroleum production since the 1970s. In particular, a steep rise in production volumes emerged after the civil war, at the beginning of the 2000s. The production is now approximately half the level of Mexico and Norway, approaching the level of Indonesia, two thirds of the levels of Brazil and Nigeria, however higher than in Malaysia.

Petroleum production 1000 boe/day

0 1000 2000 3000 4000

Angola Brazil Indonesia Malaysia Mexico Nigeria Norw ay

1000 boe / day

1970 1980 1990 2000 2008

Petroleum production 1000 boe/day

0 1000 2000 3000 4000

1000 boe / day

1970 1980 1990 2000 2008

GDP per capita

0 1000 2000 3000 4000 5000

Angola Brazil Indonesia Malaysia Mexico Nigeria

USD (constant 1990 prices)

1970 1980 1990 2000 2008

GDP per capita

0 1000 2000 3000 4000 5000

Angola Brazil Indonesia Malaysia Mexico Nigeria

USD (constant 1990 prices)

1970 1980 1990 2000 2008

Source: UNCTAD Handbook of Statistics 2009

?

Figure 2-1 Petroleum production and GDP in selected countries

Oil and gas production and its supporting activities contribute approximately 55% of GDP and more than 80% of the country‟s total foreign exchange revenues. In terms of GDP per capita Angola is in somewhat better position than the heavily populated nations Nigeria and Indonesia.

However, Angola lags behind both Brazil (high population) and Malaysia when it comes to GDP per capita.

In 2003 the central bank implemented a currency exchange rate stabilisation programme by buying kwanzas out of circulation with national foreign currency reserves. This policy significantly reduced inflation rates (cf. Figure 2-2). However, the stabilisation policy also put pressure on international net liquidity and inflation signalled an upward trend in 2009 (from 12% in 2008 to 14% in 2010), reinforced by continued strong domestic demand and the

kwanza devaluation. Figure 2-2 Angola inflation rate

During 2011 the inflation rate decreased to 11.3% and it is expected to remain in double digits⁵.

2.3 Spillover effects to other sectors

While there is heavy dependence on oil revenue, Angola‟s non-oil sector has been growing faster than the oil sector for the last two years. Until recently growth in the non-oil sector was driven mainly by public investment in construction and infrastructure, but private investment has increased markedly, especially in the construction of office buildings in Luanda. Luanda remains

4 In a bid to improve the use of its natural resources, the Angolan Government in late 2006 created the Angolan Development Bank (BDA) and soon thereafter the National Development Fund (FND) administered by the BDA, to which 5% (initially 3%) of annual oil revenues and 2% of annual diamond revenues shall be channelled.

5 AfDB / OECD report on Angola (2011)

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the economic and political hub of the country, accounting for 70-75% of economic activity and consumption⁶.

However, many projects have been of poor quality, with massive resources drained off through corrupt and inefficient procurement, and better management of Angola‟s public resources is deemed necessary.

Also, there are indications that work for major construction and infrastructure investments are awarded to international contractors or to a closed circle of Angolan companies and affiliates.

This practice leaves out a number of indigenous small and medium sized Angolan firms with limited opportunities to develop their capacity and technical skills, hence hampering a potential organic growth and distribution of wealth through broader Angolan employment and knowledge enhancement.

Resettlement has added to growth in agriculture, fisheries and farming. In 2009 the central government began disbursing directly to the provincial and municipal levels. However, inefficiency, weak absorptive capacity, and corruption severely impact the effectiveness, and the decentralisation process is running out of steam. This in part is due to limitations in human capacity which constrain the effectiveness of using funds, even once allocated.

Comparative studies have shown that the spillover effects vary largely between petroleum producing nations. European countries have employed various regimes which have resulted in technologically successful industries and scientific enhancements in related areas. Newly industrialised countries such as Malaysia and Brazil have chosen strategies for the petroleum sector and a role for their national oil companies with many commonalities to the Angolan strategy, and have been quite successful. In Africa, Nigeria and Angola are parts of the same region and face similar conditions in many respects. Lessons can be drawn from these and other countries‟ (including Norway) experience and be adopted for the Angolan context.

Petroleum and mining, 2000 - 2008

% of GDP

0 10 20 30 40 50 60 70

Angola Brazil Indonesia Malaysia Mexico Nigeria Norw ay

2000 2002 2004 2006 2008

Manufacturing 2000- 2008,

% of GDP

0 10 20 30

2000 2002 2004 2006 2008

Figure 2-3 Dominance of the petroleum sector on GDP in selected countries

Supported by demand for goods used in construction and infrastructure rehabilitation the manufacturing sector in Angola has grown rapidly, although its share in GDP remains quite small.

6 In terms of employment the Luanda area accounts for some 75% of the nations industry work places, 75% within trade, 92%

in finance and 90% in the university sector.

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Some reasons for the differences between the countries are due to deregulation, industry promotion programmes, competence building (education, research and development, training, etc.) as well as stimulating tax regimes and supportive financial incentives. The process depends in turn on enhancement of existing indigenous institutions as well as generation of new activity.

For this the availability of or potential for expertise and receiver capacity as well as genuine openings for local companies to participate in tendering (also outside the petroleum sector), are critical success factors, for which the current business environment in Angola is not conducive.

2.4 Ease of doing business

In the World Bank‟s “Ease of Doing Business” ranking Angola dropped by one position from 2011 to 2012, from place 171 to 172, out of 183 economies. As the table below shows, this decline was despite improvement in some sub-categories.

Topic Rankings 2011 Rank 2010 Rank Change in Rank

Starting a Business 167 164 -3

Dealing with Construction Permits 115 119 4

Getting Electricity 120 125 5

Registering Property 129 174 45

Getting Credit 126 130 4

Protecting Investors 65 60 -5

Paying Taxes 149 145 -4

Trading Across Borders 163 162 -1

Enforcing Contracts 181 181 No change

Resolving Insolvency 160 155 -5

Table 2-1 Ease of doing business in Angola (IFC, World Bank, 2012)

The economy has a structure of core networks where influence and economic benefits are traded. Priority should be given to creating a healthy business environment for domestic and foreign investors, implementing structural reforms, continuing to rehabilitate infrastructure and improving public expenditure management by decentralising public investment to the local level.

To date, efforts in this direction have been insufficient, and doing business in Angola remains difficult.

The less favourable characteristics of the Angolan business environment, how industries and other stakeholders must adapt to conform to unwritten rules, and how it in turn adversely affects the implementation of local content, are subjects for a number of recent studies and publications, and are not elaborated upon in this report. However, these patterns also influence the efficiency of the organisations that shall foster national development and prosperity with basis in education, equality, participation in working life and broad involvement in the building of a prosperous Angolan future. Quality higher education and sustainable angolanisation will depend on transparent and consistent institutions.

2.5 Education and knowledge economics indicators

A useful set of indicators is the World Bank‟s Knowledge Assessment Methodology (KAM), designed to facilitate comparisons across nations and economies⁷. It captures key aspects that are conducive to social development and economic growth, and allows comparison between selected countries or regions.

7 www.worldbank.org/kam

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Box 2-1 Knowledge Index The Knowledge Economy Index (KEI) is a composite index

compiled as the average of 12 indicators relating to four pillars considered critical for the knowledge economy:

i) the economic and institutional regime,

ii) the levels of the educated and skilled population, iii) the information infrastructure, and

iv) the innovation system of firms, universities and public research institutes.

The KEI measures how conducive the environment is for effective use of knowledge for economic development and represents the overall level of development of a country towards the knowledge economy.

Figure 2-4 below shows the KEI scores for some petroleum producing nations as well as 8 SADC Sub-Saharan African countries normalised to the „rest of the world‟. The average score for Sub- Saharan Africa relative to the rest of the world is a low 2.7, while Angola scores significantly lower than the Sub-Saharan average.

Figure 2-4 World Bank Knowledge Economy Index - Country comparison

Figure 2-5 below indicates that in the last 10 year period, where Angola has experienced modernisation and growth driven by the petroleum sector, there has been little effect on the level of skills and education level as measured by the KAM methodology.

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The figure illustrates progress in education and skill levels over the period 2000 to 2009. The countries that are plotted below the 45 degree line indicate a regression in their performance throughout time. The countries or regions that are marked above the line signify improvement. The regression may be due to two reasons: the country either actually has lost ground in absolute terms over time, or improved slower than the comparative group.

”Inadequate education and skills development keep economies trapped in a vicious circle of low education, low productivity and low income”

Ref: ILO report ”Skills for improved productivity,

employment, growth and development” (2008) Figure 2-5 World Bank Knowledge Economy Index- The education component

Widespread general education and occupational competences are the foundation of social capabilities to innovate, transfer and absorb new technologies, foster creativity and innovations, diversify the production structure into higher value added activities, attract more knowledge- intensive domestic and foreign investment and take advantage of global opportunities.

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3 The Angolan petroleum environment

3.1 The roles of Ministry of Petroleum - MINPET

MINPET is the organ of the Central Administration of the State authority that is responsible for the implementation of national policy and for coordinating, monitoring and control of all oil activities.

Relevant to this study this includes the responsibilities to:

 study and propose legislation regulating the activities of the petroleum sector

 propose and ensure the implementation of measures that fall within the policy of the Government for their industries, focusing on strategy and activity of the sector and encouragement of entrepreneurship

 study and propose measures to achieve the national objectives related knowledge, appreciation, rational use and renewal of the oil reserves of the country

 promote the structuring of the petroleum sector

 coordinate, supervise, monitor and control the activities in the field of petroleum

 target the policy of management and training of staff at all levels, for the efficient functioning of the sector, controlling their behaviour and results

3.2 The roles of Sonangol

Sonangol is the sole owner of hydrocarbon rights on behalf of the state. In addition to being an oil company Sonangol is the concessionaire and the tax collector.

The scope of the concessionary's activities includes negotiation of offshore and onshore oil concessions and the post-contract signature supervision of the economics related to the concession.

Angola has awarded its most important areas to technically proficient companies under structured contracts to maximise production incentives and government take. International as well as national oil companies have in recent years offered massive signature bonuses. The awards of new production sharing contracts (PSC) are becoming more transparent.

Key characteristics of the PSCs are that each development area is ring fenced for tax purposes, and the contractor assumes the risk and pays for the entire investment. When production begins, the government takes royalty based on gross revenues. Then the contractor is allocated “Cost oil”

to cover his investment costs. Finally, the remaining production, the “Profit oil” is split between the partner oil companies, Sonangol and to the government.

Sonangol takes on a growing role in the development of deepwater resources and is the operator of block 4 which was commissioned in 2009.

Sonangol also influences awards of contracts with service companies. At the same time it operates joint ventures with multinational oilfield services and fabrication, engineering, logistics and marketing companies. The intentions are that some of its interests will be sold to private Angolan investors.

Sonangol is the driver for local content policies. There is a push towards capacity building and technology transfer through serious application of the local content legislation and regulations.

Sonangol is aware of the risk of counterproductive effects on businesses if this process is driven too far or too rapidly.

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Sonangol's activities are operated through more than 30 subsidiaries which are independent business units with their own management structure. They compete against independent companies for projects in the petroleum sector as well as operations in other industries and service sectors. The subsidiaries report to the Administration Council which is the body responsible for decisions regarding overall strategy and authorisation for Group investment expenditures.

Sonangol has been under the political control of the Angolan presidency as a trustworthy instrument of its interests and has constituted a key instrument in the comprehensive system of parallel finances that has included up to half of Angola‟s yearly oil revenues. Sonangol has invested directly in all parts of the Angolan economy, also those quite unrelated to the petroleum sector, e.g. luxury housing and hotels. This may have led to less favourable conditions for other local actors with less muscle in terms of capital and skilled personnel.

Sonangol has been behaving like a sovereign wealth fund (SWF), using oil-based funds for investments in various sectors in other countries. This includes growing interests in foreign oil exploration and production, through acquisition of exploration rights in Iraq, Ecuador and Iran, as well as a stake in a private Brazilian oil company.

Thus oil wealth is being used to strengthen the concentration of Angola’s economic activity in the oil industry rather than to diversify the economy⁸. It also illustrates the extent of the Angolan Government‟s presence in the economy and its potential to take action to boost economic growth and development.

Sonangol is set to go public in 2012. The company will list its exploration, production and aviation divisions on the Johannesburg and New York stock exchanges, as well as the Luanda stock exchange, if it is up and running by then.

3.3 Petroleum sourced fast track rebuilding

The petroleum sector, which in itself provides few direct jobs, will not raise the Angolan economic and social indicators from its current levels. Sustainable employment creation and poverty reduction rely on broad economic developments that go beyond the petroleum sector. Significant numbers of new jobs can most effectively be generated through the government‟s programmes aimed at rebuilding the country‟s infrastructure and in the agriculture sector.

The situation today is that, as part of the state‟s ambition to build a modern society with base in its oil wealth, Angola has taken on an approach similar to oil rich Middle East nations by importing huge volumes of capacity, technology and workforce. While there is strong focus on local content and capacity building within the petroleum sector, there seems to be less attention to these aspects in other large scale project areas such as construction and infrastructure developments.

Portuguese companies with significant Angolan interests dominate the building sites in Luanda, while China has become Angola‟s largest trading partner and reconstruction entrepreneur. While Angolan staff is gradually entering the petroleum sector, there are relatively few locals to be seen on Portuguese and Chinese operated work sites.

The bulk of Angola‟s trade with China is made up of oil exports, while imports remain low, consisting mostly of food products and consumer goods. In 2007 China overtook USA as the largest importer of Angolan oil and in 2010 Angola overtook Saudi Arabia to become China‟s largest supplier of oil. According to Chinese officials around 50 state-owned and 400 private

8 Economic diversification in Africa: A review of selected countries, OECD 2011

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Chinese firms with around 70000 Chinese workers operate in Angola⁹. Independent estimates claim that there are more than 100000 Chinese workers in Angola today.

Angolan infrastructure rehabilitation projects undertaken by China include electricity generation and power lines, railways, ring roads, telecomm expansion and water supply in addition to large scale social housing projects.

Massive import of technology, engineers, planners, workers, materials and warehouses is a fast option to improve critical infrastructure by “rebuilding the whole country in record time”. However the limited access for Angolan enterprises to contribute in these developments is counter- productive in light of a national policy to enhance scientific and workforce capacity driven by the opportunities provided by the petroleum wealth.

9 www.ipim.gov.mo/group_detail.php?tid=20408

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4 The petroleum labour market

4.1 Manpower Demand

The petroleum industry is not a heavy user of manpower. On the contrary, it is highly capital intensive and thus a labour extensive industry, although a perfect match is required between technical competence and capital equipment to develop the petroleum reservoirs. In fact, for operations of the oil fields the industry has adopted processes that do not imply strong absorption of labour, but rather massive layoffs motivated by use of new technologies, one result of which has been the major mergers that have occurred amongst the operator companies in recent times.

After five years of massive growth the Angolan petroleum industry as a whole in 2009 had some 65000 employees. Although this is a large number, it represents only 0.8% of the working population. This is typical for the oil industry and while the indirect impact of this employment is far reaching, it would be unrealistic to expect petroleum to single-handedly solve unemployment in Angola.

On the other hand the large-scale investments in the petroleum sector means a long period with increasing demand for labour in the construction and subsequent maintenance of installations, which in turn could provide stable and high employment opportunities of significant proportions.

This trend is reflected by the rapid growth seen in the service sector which had an increase of 35000 staff in the period between 2005 and 2009 (cf. Table 4-1). In the same period the operator companies increased staff by a modest 2000 to a level of 15000, where it seems to have stabilised.

It is worth noting that the manpower demanding disciplines originating from the needs of the oil industry itself, in the next phase have potential for supply of experienced workers and growth in the non-oil manufacturing industries.

Year OpCo staff Service sector staff

Total

1975 2 006

1990 5 064

2000 10 944 2001 10 385 2002 10 818 2003

2004 12 296 12 866 25 182

2005 13 069 14 104 27 173

2006 12 834 35 984 48 818

2007 14 533 40 528 55 061

2008 14 956 49 852 64 808

2009 15 399 49 278 64 677

Table 4-1 Total employment in Angolan oil and gas sector (Teka 2011, MINPET 2009/2010)

Of the 64 677 employed in the petroleum sector in 2009, 24% worked in MINPET, Sonangol and the operating companies, while 76% were occupied in the service and supply sector (cf. Table 4-2)

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Table 4-2 Petroleum sector staff by employer category (MINPET 2010)

4.2 Specific skill requirements for the petroleum industry

Manpower requirements tend not to be a limiting factor for the global petroleum activities, but temporary shortages of certain specialised and highly educated personnel are not uncommon. It applies to every start-up of petroleum provinces in new producer nations, also for Angola.

Typically can petroleum geologists, geophysicists and drilling personnel be in short supply, categories for which the possibility of substituting personnel from other industries is small. Before a critical mass is reached, these categories are recruited from abroad or trained within companies or in new educational facilities.

The pace of the Angolan petroleum development is to some extent governed by the availability of training capacity for specialised personnel. By and large, petroleum development does not require of its personnel a unique kind of educational or training background, if one excludes this relatively small group of specialists in geological surveying and drilling operations. But relevant education, training and refresher courses will always be vital to safety, efficiency and competence, and the industry places emphasis upon personal competence and experience gained from the petroleum sector or related activity.

With new generations of complex petroleum installations, new groups of operating personnel are in demand. The installations which came on stream from mid 2000s have a higher proportion of employees with higher- and medium-level education than do the older offshore installations. Thus there is trend towards a shift in technical equipment (towards more electronic devices and more automation) as well as in skill requirements. This also seems to be the trend for onshore activities (base operations, administration, maintenance, transportation, refinery processing, etc.).

This means that the possibility of recruiting “ready” personnel from other industries is reduced, and that there will be limited demand for unskilled and semi-skilled labour while demand for skilled and professional labour is increased.

4.3 Training Needs

The growth of the Angolan petroleum sector increased the need for qualified manpower which was unknown to industry and the educational system. As the oil companies‟ operations expanded in the 1970-1980‟s and shifted from exploration to production, the demand for domestic petroleum-specific education emerged.

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In their planning for offshore exploration and production activities the oil companies put forward conflicting skills requirements for similar categories of personnel and jobs, and this tendency was seen to affect adversely both the competence of Angolan personnel and offshore safety. The need for a nationally approved education programme, adapted to industrial standards and to the national educational systems, was deeply felt for a long period.

The Angolan petroleum skills development would be simplified and coordinated with clear and homogeneous norms governing the qualifications required for various categories of personnel. A curriculum covering all positions on board a drilling platform (drilling, maritime and technical crew, platform supervisors and catering), as well as a curriculum pertaining to most other skilled work areas (mechanics, electricians, welders, fitters, operators, maintenance staff, safety (HSE) officers), must be purposed. In addition to the technical skills the petroleum industry needs qualifications within human resources, procurement, project management, finance and other certified skills.

Thus, the sector has demand for university educated staff within a number of disciplines, technical as well as others, and further there are strong needs for vocational training where quality is assured by certification and accreditation.

The key point about these curricula is that what previously has been the proprietary information of the oil and drilling companies will come within reach of the Angolan companies and authorities.

As the training efforts mostly will be scheduled to take place on land, in certified universities, schools and training facilities, Angola must have the option of adapting the programme to its domestic needs, as experience is gained. Training and educating expertise at all levels, including the academic professionals, will thus cease to belong solely to the international petroleum industry and become a window through which Angolan interests can evaluate the oil companies‟

operations and also benefit from these skills and experience in other industry sectors.

MINPET has now the authority to stipulate the qualification requirements for petroleum staff at all levels. The requirements should imply a common job structure for equivalent positions within various companies, which in turn will lay ground for homogeneous training and education. The immediate needs of the petroleum sector - much driven by the local content requirements - take priority. A series of considerations necessitates specific competence requirements and corresponding training and education options.

Higher education in Angola has until now largely benefited from monetary contributions from oil companies to formal education (scholarships). More might be achieved through actual participation of oil company personnel in local education and training, and through extended use of temporary internships for students.

4.4 Angolanisation in the petroleum sector

Provisions for the transfer of petroleum technology and for the training and employment of local staff have become decisive parts of the contractual arrangements governing exploration and production in most producer nations.

At the outset in the 1960-70s very few Angolan companies and workers took part in the petroleum activity; the oil companies used own international staff or drew on their vast network of contractor companies. Most activities were confined to exploration and drilling offshore, competence areas which were beyond the reach of Angolan enterprises, and expatriates made up for most of the requirement for skilled workers. Since then their numbers have gradually declined as Angolan workers obtained the proper skills.

This gradual substitution of expatriates is referred to as Angolanisation, representing a local capacity building process which is common in most new petroleum producing nations. This

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process has particular focus in the petroleum sector, but occurs also in other sectors. The laws governing Angolanisation are designed to allow skills transfer. Initially this is from experienced and certified expatriates to Angolans within the country. Later, certified Angolans will take over in training younger staff. This skills transfer needs to be supported by training.

The actual training of staff may take place on-site with external experts providing the training, or it is conducted abroad. Behavioural training such as in management and corporate culture is mostly undertaken in Angola, while technical training is often conducted abroad.

4.4.1 Hiring of personnel

In 1979 the law on foreign investments (10/79) established that companies should employ Angolan workers, guaranteeing them the necessary technical and professional education, and that foreign workers can only be hired when qualified Angolan workers are not available. The law was followed up with the implementation Decree 20/82 in 1982. It took into account the technological developments in the oil industry as well as new policy options for human resources, obliging foreign companies to hire 100% Angolan nationals in unskilled positions, 80% in semi- skilled roles and 70% in managerial positions by 1990. The law was in turn implemented in 1998.

MINPET statistics for 2009 shows the split between Angolans and expatriates by category as:

2009 Operators Service companies

Angolans % Expats % Angolans % Expats %

Directors 30 70 71 29

Sector managers 17 83 75 25

Middle managers 23 77 82 18

Supervisors 43 57 40 60

Technical specialists 78 22 64 36

Technicians 93 7 78 22

Administrative staff 100 0 100 0

Assistants 100 0 100 0

Table 4-3 Petroleum sector staff by category in 2009 (MINPET 2010)

In the organisation of Esso Angola, Angolans held around 45 per cent of the overall leadership positions in 2009. By year end 2010, a total of 49 Angolans had supervisory and management roles¹⁰.

4.4.2 Funding for training

Decree 20/82 also introduced the requirement that for every barrel of oil produced in Angola, USD 0.15 shall be earmarked for human resource development. Of these 15 cents, nine typically go to MINPET and six are used by the oil majors for staff training¹¹. Out of the nine cents that go to MINPET, three are earmarked for university funding. One cent of every barrel goes to the state university UAN (Universidade Agostinho Neto) and one per cent of the university funding has been transferred to the Catholic University of Angola (UCAN) to develop courses relevant for the petroleum industry. It is not always clear what happens to the money transferred once it reaches the universities. There is no transparency and no accountability regarding these funds and there seems to be no mechanism or effort from MINPET to control the effectiveness or monitor the results of its investment¹².

10 Universo Sonangol – March 2011

11 The six cents per barrel is a minimum amount for staff training by oil companies. Often the training needs and costs mean that oil majors spend more than the stipulated minimum on human resource development.

12 Gomes and Weimer 2011

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4.4.3 The Contrato Programa

One result of a review of the Angolanisation process in 2009 was Decree 17/09. This decree defines the rules and procedures to be followed in recruitment, integration, training and development of Angolan personnel and for the hiring of foreign personnel to the petroleum sector. The system was enacted on in February 2011 by the „Contrato Programa‟ (programme contract) between MINPET and the oil companies. The oil companies shall submit to MINPET for approval individual training and development plans for each staff member, every year. Further the companies half way into the period shall submit a detailed report on the implementation of their plan presented in the prior year. The companies themselves can choose training providers and type of training.

Creating, maintaining and reporting on detailed, long term career plans for every employee on half yearly basis is seen as a cumbersome process. It is not given that a certain type of training will result in the intended or wanted development, and the value of this extensive planning and reporting effort is uncertain.

Also, the proclaimed ambition for fast track Angolanisation which is inherent in this arrangement, has been seen to create unrealistic expectations amongst Angolan staff, and may have an adverse effect when facing the true picture of current training capacity.

Another setup related to the programme is the “Training Levy” the service companies pay 0.5% of contract value into a MINPET HR-fund for training and development of Angolans for the petroleum sector. Service companies may reclaim this fee against the value of documented own training efforts for local staff.

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5 Education Infrastructure

5.1 Rebuilding after the civil war

After the end of the 27 year civil war the Angolan plan to reconstruct the education system has gone through three phases: the emergency phase (2003-2005), the establishment phase (2006- 2010) and the development phase (2011-2015). The underlying objectives are the rehabilitation of physical infrastructure, human resources and institutional capacity.

Some important actors have been involved, such as UNICEF, the German National Committee for UNICEF, the Nelson Mandela Foundation, and private donors. All these actors were united under the regional Schools for Africa (SFA) initiative with the aim to build or repair 1500 schools by 2008, the number of schools destroyed between 1992 and 1996 alone¹³.

5.2 Capacity building and reforms

Institutional and systemic strengthening of the education sector and related capacity building are a pre-requisite to take on these challenges. Currently, strategic medium and long-term planning for the sector is seriously constrained by the lack of valid quantitative and qualitative information and integrated programming by all actors working in the sector. A functional Education Management Information System is not yet in place, qualitative research has been very limited during recent years, and co-ordination mechanisms are emerging but still need to be more inclusive of all partners.

A study conducted by SARUA (the Southern African Regional Universities) and presented in a Handbook in 2009 shows that the Angolan curriculum documents mention the new challenges and opportunities of today‟s globalised world and make many references to the world of work and illustrations of different occupations, but they focus only on traditional agriculture and handicrafts, without presenting the new competencies and occupation that the Angolan job market is developing.

5.3 Angola education system

The Education Act of 2001¹⁴ has established a 6+3+3/4 education structure meaning that primary education lasts 6 years, while lower secondary lasts 3 years, with basic education comprising a total of 9 years (ref. overview in Appendix i). Given the high level of illiteracy in the country, adult education is part of the education system along with the so-called „regular‟ classes.

The new Curriculum Frameworks for Primary and Lower Secondary Education emphasise an outcomes-based approach around three main categories of competencies: Saber (to know);

Saberfazer (to do) and Saber-ser (to be).

The secondary education system is divided into two cycles of three years each culminating in the Habilitaçãos Literárias. Parallel there is a technical education system divided into three years of vocational education (after primary school) and four years of middle technical education lasting for four years (after class 9). Some basic professional training starts in lower secondary.

The Ministry of Education (MED) is responsible for defining, coordinating, implementing and evaluating national policy on the pre-primary, primary and secondary education, as well as to

13 UNICEF web on Angola - http: www.unicef.org/infobycountry/angola_27832.html

14 Lei de Bases do Sistema de Educação / Lei N° 13/01 de 31 de Dezembro de 2001 (Fundamental Law of the Education System / Law no. 13 of 31 December 2001)

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promote the qualification of the population, the national education policy and national policy on vocational training in the context of national policies.

The tertiary education system comprises generally three years, after which the students obtain the title of Bacharel. They can continue to study other two years in order to obtain the Licenciatura. Medicine requires six years of studies.

In 2007, the Government implemented the State Department for Higher Education with the task to improve the higher education system with policies, management and suggestions. In 2010 the new Ministry of Higher Education, Science and Technology (MESCT) was created resulting from the merger of the former Ministry of Science and Technology and the State Department for Higher Education.

For tertiary education, in 2008 there were 70000 students enrolled in universities, 80% of that being in public universities. Overall, the education sector employed 162000 people in 2008.

Central government manages less than 20% of the total education budget. The rest is managed by provincial government¹⁵.

Public expenditure on education as % of total government expenditure

0 5 10 15 20 25 30

1970 1975 1980 1985 1990 1995 2000 2006 2009 Percent

Angola Brazil Indonesia

M alaysia M exico Nigeria

0 1 2 3 4 5 6 7

1970 1975 1980 1985 1990 1995 2000 2006 2008 Percent Public expenditure on education as % of GDP

Angola Brazil Indonesia

Malaysia Mexico Nigeria

Figure 5-1: Public expenditure on education (UNESCO Institute for Statistics)

In 2006 only 4.4% of government spending went to education in Angola. In the 2011 budget¹⁶ this share was increased to 8.2%, while countries as Malaysia, Mexico and Brazil allocate between 16 and 26% of government spending to education. The share of GDP spent on education has been constant at around 2.6% from 2000 to 2006 (cf. rightmost graph in Figure 5-1) and remained at that level also in 2010.

15 AfDB / OECD report on Angola (2010)

16 www.minfin.gv.ao/fsys/resumo_da_despesa_por_funo2011.pdf

Pilot Study on Scientific Knowledge Enhancement in Angola

Preface

Summary

Contents

1 Study background and approach

1.1 Background

1.2 Conceptual study model

1.3 Methods and data

2 Angola compared to other petroleum exporting nations

2.1 The Angolan petroleum trail

2.2 Economic indicators

2.3 Spillover effects to other sectors

2.4 Ease of doing business

2.5 Education and knowledge economics indicators

3 The Angolan petroleum environment

3.1 The roles of Ministry of Petroleum - MINPET

3.2 The roles of Sonangol

3.3 Petroleum sourced fast track rebuilding

4 The petroleum labour market

4.1 Manpower Demand

4.2 Specific skill requirements for the petroleum industry

4.3 Training Needs

4.4 Angolanisation in the petroleum sector

5 Education Infrastructure

5.1 Rebuilding after the civil war

5.2 Capacity building and reforms

5.3 Angola education system